Umbrella Companies : A Short Guide

If you are a freelancer shopping around for an umbrella company, there are a few things to look for in a firm. Some companies advertise with misleading statements and claims, so it’s best to get all the facts and know what you’re looking for.

The first thing you should know is that while many umbrella companies claim to be IR35 compliant, the truth is that they all are. Since the only option is to be paid by PAYE, being compliant is irrelevant and is just an advertising manipulation trick. Another thing to watch for is companies that advertise that you can claim expenses without receipts. Without receipts, you open yourself up to an investigation by the HMRC and you will be liable for any expenses you can’t prove, and this activity is closely watched.

Carefully examine the company’s fee structure. While most charge a flat fee for services provided, some charge rates that are income based. If you are a high earner, you will pay more for the same services as someone who earns less. If your income increases, so will the rate you pay, so it is best to make sure the firm charges a set amount monthly. Watch out for set up or exit fees, and make sure there are no penalties for terminating your contract.

Ask the company how long it takes them to pay clients. Some umbrella companies are slow to send out invoices, and in turn, are slow to pay. For some freelancers, timely payment is a very important detail, but can easily be overlooked. Find out if they take money from your pay for future payments like holiday and sick pay. This may be a desirable service for you.

Find out about their customer service. They may provide speedy, online services, but you need to know how long it will take for them to get back to you and help if you have a problem. Ask if you will have a manager that you will deal with on a regular basis or if you’ll be passed around from one person to the next to explain your problem.

Don’t be afraid to ask will be able to give you a list of companies to avoid as well as the names of some solid and reputable companies as well. As long as you know what you want in an umbrella company and can ask the important questions, finding the right one will be easy.

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